I was talking with a real estate broker today about the process of short sales, and why they are so difficult to do, and she told me a rather sad (and she said typical) story. A borrower in Compton had an $800,000 mortgage, and was about to close a short sale for $170,000.
Everything was all set to go, when the lender told the borrower that if she didn't sell, she would get a modification. The borrower in the end did not sign off on the short sale; she never did get the modification, and was foreclosed on 60 days later. Both the borrower and the lender would have been better off had the short sale happened--the borrower's credit history would have taken a smaller hit, while the lender would almost surely recover more money.
Everything was all set to go, when the lender told the borrower that if she didn't sell, she would get a modification. The borrower in the end did not sign off on the short sale; she never did get the modification, and was foreclosed on 60 days later. Both the borrower and the lender would have been better off had the short sale happened--the borrower's credit history would have taken a smaller hit, while the lender would almost surely recover more money.
